• US CPI Data revealed a less than expected inflation rate in March at 5%.
• Market’s average rate of price change is quantified by the index every month and the US Federal Reserve seeks to limit price increases to 2%.
• Stock futures in the United States increased when the March 2023 inflation report came in lower than predicted.
US CPI Data Reveals Less Than Expected Inflation Rate in March
The US Federal Reserve recently issued its Consumer Price Index (CPI) for March 2023, which showed an annual rise in the all-items index of 5.0% before seasonal adjustment. This was lower than anticipated, leading traders to anticipate that the US central bank would begin the ‘Fed pivot’ or rate decreases prior to a no-increase prospect sometime in 2023. The market’s average rate of price change is quantified by the index that is calculated every month and the US Federal Reserve seeks to limit price increases to 2% from their current 5%.
Impact on Stocks and Crypto
The surprise inflation report caused stock futures in the United States to increase. Meanwhile, the crypto market registered a 1% increase after initially showing little reaction. On Wednesday, Mary Daly, president, and chief executive officer of the Federal Reserve Bank of San Francisco said that the Federal Reserve still had “more work to do” with regards to raising interest rates despite signs of strength in other areas such as a tightening labor market.
Compared to February when prices grew by 0.4%, prices increased by 0.1% in March 2023 after seasonal adjustments were made. To some extent offsetting this decrease was an increase in shelter index driving up total CPI figures overall.
Federal Reserve’s Actions
The US central bank also had to cope with issues within regional banking systems which led to closure of certain local institutions during this time period. As part of its efforts towards limiting price increases, it will likely begin implementing ‘Fed pivot’ or rate decreases prior to a no-increase prospect sometime later this year according its president Mary Daly on Wednesday.
In conclusion, while inflation statistics for March showed an annual rise before seasonal adjustment, they were still lower than expected causing stocks and crypto markets both react positively as traders anticipate potential changes from U.S Federal Reserves actions this year towards reining-in price rises